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Internet sales tax means local shopping is a plus for counties

No one knows for sure how much county governments will receive from New York State's new sales tax on internet purchases, but one thing is clear: Counties won't receive as much as they do when consumers buy at a brick-and-mortar store.

That's because Albany will keep $60 million of the projected internet tax revenue to pay some of its direct aid to towns and villages.

So shopping locally now makes a difference for county government as well as for merchants, because counties receive their full share of sales tax only on local purchases.

"We'd much rather people buy from a local entity than online," Erie County Executive Mark Poloncarz said Monday. "Now, they're going to have to pay the same sales tax anyway, but you're much better off supporting a local business."

The new state budget assumes that counties outside New York City will collectively net $160 million from the new internet tax.

The projection would be $220 million if not for the local aid replacement provision, said Mark LaVigne, a spokesman for the New York State Association of Counties.

At first, Gov. Andrew M. Cuomo proposed that counties should make up the $60 million cut in state aid to localities with direct payments of county money to their towns and villages, but county executives around the state protested.

Counties already share their sales tax revenue with cities, towns, villages and school districts. For example, Erie County gives 46 percent of its sales tax receipts to localities and schools.

"The irony is, towns are funding their state aid with their own sales tax revenue," Niagara County Manager Richard E. Updegrove said.

"We really don't know how much we're going to generate in new tax because it's from entities we've never received tax from before," Poloncarz said.

If the revenue turns out to be less than the state aid owed to localities, counties would have to make up the difference, Poloncarz said.

"Are we happy with the final results? It's not ideal. It's certainly not what we advocated for," said Charles H. Nesbitt Jr., Orleans County chief administrative officer and president of the Association of Counties.

"Since our entire county property tax levy is used to pay for state programs, there is a reliance on sales tax revenues to fund county operations, such as police protection and road construction and maintenance," Updegrove said. "The state use of local sales tax revenue to directly fund state obligations is unprecedented."

"That's not a great precedent for us. Obviously, it's a slippery slope," Nesbitt said.

"Whether it's fair or not, it's unfortunately what we have to deal with," Poloncarz said. "I've advocated against it. I've talked to the governor's staff and others. It's done. I can't fix it."

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